Supply, Demand & Capacity Margin (UK example)

The chart above is redrawn from data within a publication by National Grid SO (system operator) here in the UK. Published in October 2019, it’s entitled “2019/2020 Winter Outlook“. It’s National Grid’s annual expectation of the supply and demand picture for electricity in the forthcoming winter, the season in which the UK’s demands are highest; and hence in which security of supply is most critical. (NB. the report covers not just electricity, but gas too).

The left-hand column adds up all the capacity that technically exists in the UK electricity system, connected at both transmission and distribution network (’embedded’) levels. Note that “renewable” includes embedded renewable generation, so ’embedded & DSR’ refers to non-renewable embedded generation (added to DSR = demand-side response).

The middle column shows the impact of capacity ‘de-rating’. De-rating presents the capacity that the system operator believes can actually be available at the time when peak demand occurs. You’ll notice that every type of generation is de-rated to some extent: even conventional power plants suffer outages. However the most dramatic de-rating happens for the renewable block.

Solar capacity in the UK is over 13GW, yet winter peaks generally happen after dark; so, for studies like this one, most (98-99%) of that solar capacity is assumed to provide no contribution to meeting peak demand. It’s also impossible to give firm guarantees on high winds coinciding with peak demand. So, based on historical weather data, wind capacity is heavily de-rated too, by more than 90% onshore and a little less (85-87%) offshore.

An increasingly decarbonised power system is going to be one where, on that left-hand column, the thermal capacity shrinks and renewable capacity grows. So, in order to maintain security of supply, there clearly need to be some major capacity changes elsewhere; either to offset or reduce the de-rating of any new renewable capacity (and/or to reduce peak demands).

Storage, interconnectors and demand-side response are all growing; but charts like this give a good sense of just how big that growth needs to be – and the opportunity for developers and investors – if we’re going to be able to turn off thermal power plants for good.